In fact, many of the capabilities are so similar that I wouldn't be surprised to see a patent suit break out between the two companies, to be honest.

To PayPal's credit, however, the process of using the Here seems smooth and straightforward, with some improvements over what Square offers. For example, one of the small businesses owners eBay lined up to help demonstrate the Here told me that he switched over because the Here offers encrypted payments, while Square's reader does not. (When asked, he said he had not been paid to switch payment vendors.)

On the other hand, several features of the Here seem like unabashed clones of the Square reader - case in point, the rather nifty ability for the app to "check in" with merchants, and essentially authenticate you before walking in the door. That's remarkably similar to Square's "pay with your name" feature.

With the app, PayPal has relaunched the "Local" feature, allowing you to find local merchants that use PayPal. (Searching a remote location will come later, Anuj Nayar, PayPal's director of global communications, told me.) Users can load their PayPal wallet with funds from other accounts, including checks.

The ability to check in at a local merchant is a nifty feature, and one that promises to integrate well with its digital wallet, launching in May. Users can search for local merchants that accept PayPal, enter the merchant's place of business, and "announce themselves" by pulling a push pin on a separate screen. (See the accompanying slideshow for more.)

When the user does this, the merchant's phone registers the presence of the customer. Ideally, "Steve," the customer, would walk to the register, announce himself ("Hi, I'm Steve, and I'll be paying with PayPal") and the merchant would simply identify the customer and apply the bill to his PayPal account. Note that the user needs to have a clear picture of himself in his profile to ensure he's easily identified.

PayPal Here

"Here" provides an alternative mode of payment. Like Square, the little purple plastic triangle plugs into the ear jack of the phone; PayPal added a plastic "wink," or lip, to help prevent the reader from twisting about when sliding a card through.

Assuming that the user is logged into PayPal, the merchant can open the Here app, where the merchant can tally up the user's purchases, then either present him with a total or send an invoice. After the bill is totaled up, the user can swipe the credit card through the reader. Like Square, users can "sign" for the bill using their finger to smear a signature across the page.

Honestly, that's about it. If, for some reason, the user requests a refund, PayPal will allow one to be issued for up to 60 days.

Modern e-commerce tries to eliminate complications, and in that, the new Here and PayPal Mobile apps have succeeded. Ryan Lawler at GigaOM makes the valid point that Here could be used for inventory management; given eBay's strategy of integrating a number of its online commerce services, allowing a user to see how many garden rakes remain at the local Home Depot doesn't seem that far-fetched.

One of the reasons it's worth paying attention to mobile payments is its inevitable societal effect. Over time, more and more users will undoubtedly turn to direct and indirect payments by phone. PayPal says it will charge just 2.7 percent to process each merchant payment, a shade below what Square is offering. The addition of more third-party credit-card readers, by a payment processor like Visa, for example, could force this even lower. (Editor's Note: Engadget has uncovered three Chinese knockoffs.) Whoever manages to offer the best value to merchants stands to rake in some serious cash.

For consumers, though, Here and Square couldn't be easier - after all, they're just swiping their traditional credit card. For that reason alone, it's hard to see how both won't inevitably succeed.

About the Author

Mark Hachman Mark joined ExtremeTech in 2001 as the news editor, after rival CMP/United Media decided at the time that online news did not make sense in the new millennium.
Mark stumbled into his career after discovering that writing the great American novel did not pay a monthly salary, and that his other possible career choice, physics, require... See Full Bio

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